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(Democrat-Gazette, May 5, 2011)

Return to higher rates

Not only is our financial system broken, but our bond rating is now threatened, which could lead to default. How did we get here and how do we rescue ourselves?

For years, we had a true progressive tax system which was based on ability to pay. In the 1970’s, CEOs paid a tax rate of 70 percent. If they had a good year they did not pay themselves exorbitant bonuses. Why give the IRS 70 percent of your profits? Instead, they plowed their earnings back into research and development, new products, upgrading plants and equipment. The results were job creation, which resulted in more tax revenue. At that time our federal debt was around 30 percent of GDP.

In 1980, we elected a president who was clueless. He was a natural to buy into the Laffer Curve, which said that if you cut taxes on the wealthy and corporations, they will invest more and trickle down into an improved economy. In a short time the highest income tax rate was down to 28 percent. Everyone took advantage of this freebee and the federal debt grew.

Now the party that caused this problem wants to cut the deficit on the backs of the poor and the elderly. What we need is revenue via a return to a true progressive tax code. That means we will see increased taxes, particularly on the wealthy. As Oliver Wendell Holmes Jr. said, taxes are the price we pay for a civilized society.

BOB WATERS
Hot Springs Village